Selling Your Southern California Home When Interest Rates Are High
In 2020, mortgage interest rates were hovering around 3%. Home sales and the mortgage industry were booming. However, right now we are looking at interest rates closer to 8%. This monumental increase is due to the inflation-fighting measure recently implemented by the FED hiking national interest rates, which cascade down into mortgages.
With rates this high, it should come as no surprise that both homebuyers and home sellers have been affected. It is simply less financially beneficial to take out a new mortgage right now. There are still plenty of circumstances where people need to sell a house, but there are also fewer people clamoring to buy. If you are having trouble selling a Southern California home in this high-interest-rate economy, these tips are for you.
What Does a High Mortgage Interest Rate Mean for Home Sellers in Southern California?
Southern California is full of high-value homes. In a healthy housing economy, selling would be no problem. However, this unusually high-interest rate is changing how home buyers make decisions. Right now, fewer people can afford to buy a Southern California home because interest adds so much more expense to the purchase. This has also resulted in slower price appreciation due to fewer sellers helping the market to cycle quickly.
At the same time, sellers are also less likely to sell if they currently have a home with a low-interest rate and their next home would have a higher rate with a new mortgage.
What Should Southern California Home Sellers Expect in a High-Interest Environment?
With interest rates this highly, sellers should be aware that buyers may ask for rate buy-downs. This is when the seller provides funds to help lower the buyer’s monthly interest rates through the mortgage points system. In other words, you pay for your sellers to pay less in interest.
Your buyers may also ask for other concessions during negotiations to help reduce their own costs. They may be more demanding about pre-sale repairs or minor renovations. They may ask you to meet their desired closing and moving timeline, or they may ask that the seller cover other costs like all the legal document fees, appraisal, and inspection fees, or cover their first year of property taxes in order to secure the sale.
Southern California home sellers will also likely receive fewer overall offers than they are used to in the typically high-demand market.
What Should Southern California Home Owners Do to Sell Faster?
How can you sell your home faster in a market made more difficult by the high-interest rate? There are a few steps you can take to improve your home’s desirability, inherent value, and selling speed.
- Prepare the house to be move-in ready with light repairs, fresh paint, landscaping, and so on.
- Invest in small-scale remodeling with a high ROI, like refacing cabinets or replacing water fixtures.
- Offer a rate buy-down up front as a strong negotiation tactic
- Always price appropriately. It’s better to price your home lower on a slow market than higher to attract more offers. Then negotiate over asking price for a good quality home.
Selling Your Southern California Home in a High Interset Rate Market
In a high interest rate mortgage market, buyers may be strapped for cash and they simply can’t afford to buy a home that needs work. If you have a home that needs repairs and cannot be easily made move-in ready, a cash offer may provide the better option. Quick Home Offers can get a damaged Southern California house off your hands for a good price faster and more efficiently than selling a non-move-in-ready home in today’s market.
For a free, no-obligation cash offer, contact us today.